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Breaking: MtGox CEO Faces Court Verdict in 3 Days. Is This The End of the Story?

The Mt. Gox case could be close to concluding one of the most significant stages of a 5-year odyssey. According to Channel News Asia, the Japanese court in charge of the trial is expected to issue a verdict on Karpeles’ innocence or guilt this Friday.

Karpeles faces up to 10 years on charges of faking digital data and embezzling millions of dollars. In case of being found guilty, it is very probable that this Friday we all learn about the penalty that awaits him. The Court should subtract the five years him has already served in a Japanese prison while awaiting sentencing from his sentence.

During the entire trial Mark Karpeles, 33, has pleaded not guilty. Statements collected by the media during the trial portray a Karpeles convinced of his innocence but aware of the difficulty of proving it.

“I swear to God that I am innocent … Most people will not believe what I say. The only solution I have is to actually find the real culprits.”

MtGox and The Bitcoin (BTC) Tragedy: From “Hack” to “Embezzlement”

Mark Karpeles was CEO of MtGox, the most important crypto exchange during 2014, handling over 70% of the total Bitcoin trading volume by the time. In February 2014 the firm lost 850000 Bitcoin (BTC) in strange circumstances.

Shortly after, Karpeles published a post on the Exchange website saying he “found” 200000 Bitcoin (BTC) in an “old-format” cold wallet.

In 2015, an investigation by the Japanese cybersecurity firm WizSec concluded that “most or all of the missing bitcoins were stolen straight out of the Mt. Gox hot wallet over time, beginning in late 2011.

The evolution of the events led the authorities to accuse Karpeles of playing a direct part in the loss of the Bitcoins. In statements for Asian media, Satoshi Mihira, chief attorney at Mizuho Chuo law firm explained that a hack directs investigations to find the perpetrator of the crime while embezzlement directs investigations towards Karpeles as the main suspect.

“If it was an outside hacker who stole the currency, it’s a problem. But if he stole even part of the money, it would be embezzlement …

His defense counsel needs a high level of evidence to win an innocent verdict,”

The situation is quite complex for Karpeles: Not only was it virtually impossible for him to present the evidence necessary to clean his image of any doubt, but there is also a “tradition” in the Japanese courts of having a high conviction rate (some speak of a 99% chance of being found guilty).

This being the most likely scenario, the defense is expected to appeal the verdict.

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Ten-Year Jail Term Looms Large for Former Mt. Gox Chief

Japanese Prosecutors are clamoring a 10-year jail term for former CEO of defunct Japanese Bitcoin exchange, Mark Karpelès. This comes in the midst of the extension announced for civil rehabilitation claims.

More Trouble for Former Mt. Gox Chief

The nightmare does not seem to end for Mark Karpelès, as the Nikkei Asian Review today (December 12) reported that Japanese prosecutors at the Tokyo District Court, called for a 10-year jail term for the Mt. Gox CEO for embezzlement. According to the prosecutors, Karpelès embezzled 340 million yen from accounts belonging to customers in the last quarter of 2013.

Furthermore, the Japanese prosecutors claim that Karpelès used the embezzled funds for personal purposes, such as rent and business acquisitions. The prosecutors are also accusing the Mt. Gox Chief of forging the company’s data, thereby manipulating accounts illegally.

However, during the court proceedings, the defendant, Mark Karpelès, denied the accusations leveled against him. Karpelès responding to the embezzlement accusations stated that the funds acted as a temporary loan.

In response to the former CEO’s statement, the prosecutors at the court said:

There was no documentation of loans, and there was no intention of paying back the money.

The prosecutors went further to demand a harsh sentence for Karpelès. According to the Japanese prosecutors, the Mt. Gox Chief betrayed his clients’ confidence and misused most of their funds.

Former French CEO of defunct Japanese exchange, Mt. Gox, was initially arrested in 2015 for forging the exchange’s system to inflate its account. The Mt. Gox Chief stood trial two years later in July 2017 for the collapse of the company and embezzling funds. Karpelès in a later interview likened the experience of the company’s hack to falling from a building.

Mt. Gox’s Attempts to Pay its Debts

The collapsed Japanese Bitcoin exchange, Mt. Gox, has made moves to compensate its victims following the massive hack in 2014. Former clients of the defunct company called for civil rehabilitation proceedings in 2017, with the courts granting their claims in 2018.

Rehabilitation trustee for the defunct Japanese exchange, Nobuaki Kobayashi, announced  the commencement of the civil rehabilitation proceedings. Initially meant for individual creditors, the rehabilitation process later extended to corporate creditors. The deadline for filing claims was October 22, 2018.

However, Kobayashi announced an extension for filing claims to December 2018 for creditors who were yet to file claims. Although, the rehabilitation officer emphasized that only the court had the power to accept further claims after the initial deadline.

Image courtesy of Shutterstock.

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